I think its several factors to why it's slowed down/died.
Steeper learning curve for tools, people are more critical (it seems) since they judge whatever model or texture 14 year old Johnny Modalot (fictional person!!!) creates to the models and textures found in the latest AAA game.
Game schools are abundant, so people with even a minor interest in games dev can study for a couple of years and most likely get a job afterwards. Before it seemed that modding was THE stepping stone into the industry, but that's the past (sadly).
Market is completely filled with AAA games, so a new Counterstrike will probably never happen since no player has the attention span or commitment of following beta releases of a no-name mod, since there's so much other cool stuff being released all the time. No players = no feedback or testing, which means slow death for the could-be-great mod.
As a conclusion, yes I think it's pretty dead. Atleast on lifesupport! Which sucks 
